The true cost of waste
Generally, there are two types of costs associated with workplace waste:
- waste disposal and management costs
- costs associated with the generation of waste.
Identify the hidden costs
The costs associated with waste generation are often hidden to business, and can include:
- cost of raw material written off as waste
- lost opportunity (when waste can be converted into finished products)
- making waste
- waste treatment cost
- rework cost
- lost in production time
- staff time on unproductive waste management work
- storage and clean-up costs.
These costs are often disguised as inevitable components of running a business, such as:
- rejects
- changeover losses
- over-specified products
- spills.
Don't limit your strategy to waste disposal
Looking only at waste disposal cost is not an effective improvement strategy. Research indicates that:
- Waste disposal typically only represents 10% of the total cost of producing waste when 'hidden' costs are included.
- In the manufacturing industry, the raw material cost is 60% of the total manufacturing cost.
Assess production systems to uncover inefficiencies that lead to hidden costs.
